After the YouTube/VZ deal posts … I was a little depressed ;-) But it looks like Marek@MEX has “kinda” brightened my day with this post on Hutchinson 3G’s approach. The important lines are that Hutchinson is a “greenfield” operator. This is not an incumbent trying this.
Last week Hutchison 3G held a major launch event for its ‘X-Series‘ initiative, making a clear statement to the industry that it intended to turn away from convential price plans and its previously restrictive policies of limiting internet access. Instead, Hutchison will embrace an open access model across its Three networks, allowing users to pay a flat fee for accessing web services and removing the ‘garden walls’ which have prevented subscribers from visiting web pages outside the operator portal.
While certain operators around the world have already been flirting with a similar model – T-Mobile with its Web ‘N’ Walk, for instance – Hutchison has scored a marketing coup by trumpeting its plans as a key strategy change. As a ‘greenfield’ operator with no legacy business to canabalise and a network rich in capacity, it can afford to embrace a new approach to pricing and service delivery without the same fear of investor backlash that constrains the likes of Vodafone, Orange and other operators who have large institutional shareholders.
More importantly, it has also lined up a dream team of partners to deliver popular web services for the X-Series: Yahoo, Google, Microsoft, eBay, Skype, Sling Media, Orb Networks, Nokia and Sony Ericsson. To quote Three, the X-Series represents: ‘TV, home PC and all the best of the web on your mobile.’
It is no small feat for Hutchison to have brought all of these partners, often competitors in their own fields, to the same table. This has been achieved because Three has worked closely with them to ensure they can provide a user experience which is integrated with their existing businesses, familiar to users and priced sensibly – i.e. flat fees for unlimited monthly usage.
While many operators in the mobile industry are still relying on the size of their customer bases and their ownership of the billing relationship to ensure long-term growth in data services, Three has woken up to the uncomfortable truth: it doesn’t matter how many voice and text customers you’ve got if you’re not capable of marketing new services to them. Companies like Google and Skype have active networks of passionate subscribers who rely on their data services. As such, they are an incredibly powerful ally in building a mobile data business. Quite simply, customers are more likely to want to mobilise their existing services than commit to new offerings from an operator they associate with voice calls.
The result will be two-fold: Three’s approach will attract the savvy, active data users who are keen to extend their digital lifestyle applications into the mobile envirionment. In doing so, it will be able to leverage network effects to cross-sell additional services to these customers and increase basic communications usage. Secondly, Hutchison will potentially change the dynamics of its revenue stream. Voice and text will become true commodities and the flat-rate subscription pricing for data services will allow it to break the ‘25 percent’ ceiling which seems to cap data as a proportion of revenue for most other operators.
It was interesting to see Hutchison taking this approach just a couple of weeks after my article entitled ‘Why value is slipping away from the operators‘. I have since had private conversations with several major European carriers who are looking closely at their long-term role in the industry and how they can profitably evolve from service provider to service enabler. This will be a major theme at our next MEX conference in May 2007 – now is the time to get in touch if you’d like to be involved in the debate.
I truncated here…. Go to original for remaining part of post on Nokia and Sony Ericsson products